Canada economy in for longer 'detour,' growth to pick up later in 2019

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FILE PHOTO: People go shopping in the Eaton Centre shopping mall as they walk by a giant Christmas Tree in Toronto, December 7, 2012. REUTERS/Mark Blinch

OTTAWA, (Reuters) - The Canadian economy is in for a longer-than-expected “detour” as consumer spending, business investment and the energy sector weigh, but economic growth is set to pick up later in 2019, a deputy governor of the Bank of Canada said on Thursday.

Speaking the day after the central bank held interest rates and said there was “increased uncertainty” on the timing of future rate hikes, Lynn Patterson said that decision hinged on a slowing global economy, ongoing trade tensions, and the underperformance of the Canadian economy in the fourth quarter of 2018.

“Although we figured the economy was in for a detour at the end of last year, that detour may wind up being longer than we had expected,” she told a business audience in Hamilton, Ontario.

She reiterated that the central bank now expects the economy will be weaker than projected in the first half of 2019, but said it still expects economic growth to pick up later in the year, supported by strength in employment and rising wages.